FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today
reported results for the three and six months ended June 30,
2020.
Q2 2020 highlights (as measured against the same three-month
period last year, except where noted):
- Net loss of $21.5 million or $1.57 per diluted share as
compared to net income of $7.1 million or $0.55 per diluted
share.
- Adjusted operating loss of $28.1 million or $2.05 per diluted
share as compared to adjusted operating income of $5.7 million or
$0.44 per diluted share.
- $48.3 million of claims, net of recoveries, pre-tax, from
fourteen Property Claims Services ("PCS") weather events, impacting
Florida, Texas and Louisiana, including Tropical Storm Cristobal
and a Florida panhandle wildfire, as previously communicated.
- Strengthened reserves for prior accident years by $7.5 million,
pre-tax, related primarily to the 2019 accident year in the Florida
homeowners line of business, as previously communicated.
- 21.4% increase in gross written premiums to $205.4 million,
including $28.1 million from Maison.
- Net premiums earned increased 20.8% or $19.2 million, to $111.5
million, including $14.9 million from Maison.
- Combined ratio of 147.9%, up 46.4 points, including 43.3 points
of net catastrophe losses and 6.7 points of prior year development
and 6.7 points of prior year development in the period.
- Quarter-end Florida homeowners in-force policies decreased 4.2%
to approximately 230,000, reflecting continued execution of our
strategy to limit our exposure in this market until rates more
accurately reflect increased costs of claims and reinsurance.
- 148.3% increase in non-Florida homeowners in-force policies to
approximately 149,000, in-line with our diversification
strategy.
- Book value per share decreased $1.07, or 6.2%, to $16.18 as
compared to $17.25 as of December 31, 2019, due primarily to a
net loss of $1.38 per share and dividends declared of $0.18 per
share, partially offset by unrealized gains on our fixed-income
portfolio of $0.30 and repurchases of stock of $0.27 per
share.
- Repurchased 276,652 shares of common stock, at a discount to
book value per share, at a total cost of $3.3 million during the
second quarter of 2020.
“Our second quarter results were impacted by a high number of
severe weather events in Florida, and across the Southeast,
including fourteen industry events, which included Tropical Storm
Cristobal,” said Mr. Michael H. Braun, FedNat’ s Chief Executive
Officer. “The claims environment in the Florida homeowners market
continues to be challenging, and as a result we decided to
proactively strengthen our property reserves for the 2019 accident
year. We are also taking action to mitigate the difficult claims
environment by continuing to raise rates and restrict new business
in Florida until our rates more accurately reflect our increased
cost of doing business primarily as a result of claims severity and
reinsurance costs. The profitability of our non-Florida homeowners
business, excluding the impact of these recent severe weather
events, continues to meet our expectations and we remain focused on
our long-term growth strategy of expanding profitably in more
attractive coastal homeowners markets outside of Florida.”
Mr. Braun continued, “FedNat’s balance sheet and capital structure
remain solid, which will enable us to continue providing best in
class service to our policyholder and agents while maintaining our
commitment to returning capital to our shareholders through our
dividend and opportunistic share repurchases, based on the needs of
our company and the market price of our shares. We commend the
dedication and hard work of our employees, who remain focused on
ensuring FedNat’s commitment to providing the highest quality
service to our policyholders and trusted agents, especially during
these challenging times where 95% of our staff is working
remote.”
Revenues
- Total revenue increased $28.7 million or 27.3%, to $134.0
million for the three months ended June 30, 2020, compared
with $105.3 million for the three months ended June 30, 2019.
The increase was driven by net premiums growth, including the
effect of the acquisition of Maison and net investment gains, all
of which are discussed below.
- Gross premiums written increased $36.2 million, or 21.4%, to
$205.4 million in the quarter compared with $169.2 million for the
same three-month period last year. Gross premiums written increased
due to organic non-Florida growth, and $28.1 million from Maison,
83% of which was non-Florida. Our organic non-Florida business
continues to show exceptional growth year over year, especially in
the state of Texas, which has allowed us to leverage our
infrastructure and diversify insurance risk. Overall, Homeowners
grew 21.6%.
- Gross premiums earned increased $38.7 million, or 27.4%, to
$179.9 million for the three months ended June 30, 2020, as
compared to $141.2 million for the three months ended June 30,
2019. The higher gross premiums earned was primarily driven by
continued non-Florida growth, including $19.7 million from the
acquisition of Maison.
- Ceded premiums increased $19.5 million, or 39.9%, to $68.4
million in the quarter, compared to $48.9 million the same
three-month period last year. The increase was driven by higher
excess of loss reinsurance spend primarily related to increased
property exposures in our non-Florida business, including from the
Maison acquisition.
- Net investment income decreased $1.0 million, or 21.6%, to $3.3
million during the three months ended June 30, 2020, as
compared to $4.3 million during the three months ended
June 30, 2019. The decrease was due primarily to the lower
interest rate environment in 2020 and elevated second quarter 2019
income earned on debt proceeds that had not yet been deployed on
the Maison acquisition, partially offset by fixed income portfolio
growth in 2020 from the Maison acquisition.
- Net realized and unrealized investment gains (losses) increased
$8.4 million, to $10.4 million for the three months ended
June 30, 2020, compared to $2.0 million in the prior year
period. We recognized $3.3 million and $1.2 million in unrealized
investment gains (losses) for equity securities during these
respective periods. Our current and prior year net realized gains
are primarily associated with our portfolio managers, under our
control, moving out of positions due to both macro and micro
conditions, a typical practice each and every quarter. Furthermore,
to mitigate the potential COVID-19 related adverse impact on the
financial stability of the issuers of securities we hold, certain
positions were liquidated during 2020.
- Direct written policy fees increased $1.2 million, or 49.5%, to
$3.6 million for the three months ended June 30, 2020, as compared
to $2.4 million during the three months ended June 30, 2019.
The increase is primarily driven by the fees associated with
Maison’s premiums and, to a lesser extent, organic non-Florida
growth.
- Other income increased $0.8 million, or 19.3%, to $5.2 million
in the quarter, compared with $4.4 million in the same three-month
period last year. The increase in other income was primarily driven
by higher brokerage revenue. The brokerage revenue increase is the
result of higher excess of loss reinsurance spend from the
reinsurance programs in place during the second quarter of 2020 as
compared to the second quarter of 2019.
Expenses
- Losses and loss adjustment expenses (“LAE”) increased $64.6
million, or 98.8%, to $129.9 million for the three months ended
June 30, 2020, compared with $65.3 million for the same
three-month period last year. The net loss ratio increased 45.7
percentage points, to 116.5% in the current quarter, as compared to
70.8% in the second quarter of 2019. The higher loss ratio was
primarily the result of higher weather-related net losses when
comparing the periods, as the second quarter of 2020 included $59.2
million, net of reinsurance (of which, $22.0 million were from
FedNat Insurance Company's ("FNIC") non-Florida losses which are
subject to a 50% profit-sharing agreement) and strengthening
reserves for prior accident years by $7.5 million related primarily
to 2019 accident year in the Florida homeowners line of business.
The second quarter 2020 catastrophe losses were fourteen PCS
weather events, impacting Florida, Texas and Louisiana, including
Tropical Storm Cristobal and a Florida panhandle wildfire. See the
Company’s Form 8-K filed with the SEC on July 17, 2020 for a
breakout of catastrophe losses by state. Additionally, higher
volume of policies in force drove approximately $12.0 million of
higher losses as compared to 2019. These items were partially
offset by weather-related losses in the corresponding period in
2019, which included twelve catastrophe events totaling $17.0
million in losses and LAE.
- The net expense ratio increased 0.7% percentage points to 31.4%
in the second quarter of 2020, as compared to 30.7% in the second
quarter of 2019.
- Commissions and other underwriting expenses increased $6.7
million, or 29.7%, to $29.3 million for the three months ended
June 30, 2020, compared with $22.6 million for the three
months ended June 30, 2019. The increase was primarily driven
by higher non-Florida acquisition related cost as a result of
premium growth. This was partially offset by a higher benefit in
the current quarter from the 50% profit-sharing agreement, as
FNIC's non-Florida business experienced higher weather losses in
the current quarter than the second quarter of 2019.
- Income taxes (benefits) decreased $13.9 million, to a benefit
of $(11.3) million for the three months ended June 30, 2020,
compared to a tax expense of $2.6 million for the three months
ended June 30, 2019. The decrease in income tax expense is
predominantly the result of the pre-tax loss during the current
quarter as compared to income during the second quarter of 2019.
Additionally, the Coronavirus Aid, Relief, and Economic Security
Act, signed into law on March 27, 2020, is allowing us to carry
back net operating loss to prior years when federal income taxes
were at 35%, which increased our effective tax rate during the
current quarter.
Stock Repurchase Program
- During the second quarter of 2020, the Company repurchased
276,652 shares of common stock for $3.3 million at an average price
per share of $11.75.
Non-GAAP Performance Measures
Non United States generally accepted accounting principles
("GAAP") measures do not replace the most directly comparable GAAP
measures and we have included detailed reconciliations thereof on
page 10.
We exclude the after-tax (using our statutory income tax rate)
effects of the following items from GAAP net income (loss) to
arrive at adjusted operating income (loss):
- Net realized and unrealized gains (losses), including, but not
limited to, gains (losses) associated with investments and early
extinguishment of debt;
- Acquisition, integration and other costs and the amortization
of specifically identifiable intangibles (other than value of
business acquired);
- Impairment of intangibles;
- Income (loss) from initial adoption of new regulations and
accounting guidance; and
- Income (loss) from discontinued operations.
We also exclude the pre-tax effect of the first bullet above
from GAAP revenues to arrive at adjusted operating revenues.
Management believes these non-GAAP performance measures allow
for a better understanding of the underlying trend in our business,
as the excluded items are not necessarily indicative of our
operating fundamentals or performance.
Similarly, we exclude accumulated other comprehensive income
(loss) ("AOCI") from book value per share to arrive at book value
per share, excluding AOCI.
Conference Call Information
The Company will hold an investor conference call at 9:00 AM
(ET) Thursday, August 6, 2020. The Company’s CEO, Michael Braun and
its CFO, Ronald Jordan will discuss the financial results and
review the outlook for the Company. Messrs. Braun and Jordan invite
interested parties to participate in the conference call.
Listeners interested in participating in the Q&A session may
access the conference call as follows:
Toll-Free Dial-in: (877) 303-6913
Conference ID: 3668319
A live webcast of the call will be available online via the
“Conference Calls” section of the Company’s website at FedNat.com
or interested parties can click on the following link:
http://www.fednat.com/investors/conference-calls/
Please call at least five minutes in advance to ensure that you
are connected prior to the presentation. A webcast replay of the
conference call will be available shortly after the live webcast is
completed and may be accessed via the Company’s website.
About the Company
The Company is an insurance holding company that controls
substantially all aspects of the insurance underwriting,
distribution and claims processes through our subsidiaries and
contractual relationships with independent agents and general
agents. The Company, through our wholly owned subsidiaries, are
authorized to underwrite, and/or place homeowners multi-peril,
federal flood and other lines of insurance in Florida and other
states. We market, distribute and service our own and third-party
insurers’ products and other services through a network of
independent and general agents.
The Company presents users with data related to different
aspects of our business to afford users greater transparency into
our results. Homeowners Florida consists of data related to our
homeowners and fire property and casualty insurance business, which
currently operates in Florida. Homeowners non-Florida consists of
data related to our homeowners and fire property and casualty
insurance business, which currently operates in Alabama, Louisiana,
South Carolina, Texas and Mississippi. Non-core consists of
financial information related to nonstandard personal automobile
insurance business which operated in Florida, Georgia, Texas and
Alabama and our commercial general liability insurance
business.
Forward-Looking Statements
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995:
Statements that are not historical fact are forward-looking
statements that are subject to certain risks and uncertainties that
could cause actual events and results to differ materially from
those discussed herein. Without limiting the generality of the
foregoing, words such as “anticipate,” “believe,” “budget,”
“contemplate,” “continue,” “could,” “envision,” “estimate,”
“expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,”
“possibly,” “potential,” “predict,” “probably,” “pro-forma,”
“project,” “seek,” “should,” “target,” or “will” or the negative or
other variations thereof, and similar words or phrases or
comparable terminology, are intended to identify forward-looking
statements.
Forward-looking statements might also include, but are not
limited to, one or more of the following:
- Projections of revenues, income, earnings per share, dividends,
capital structure or other financial items or measures;
- Descriptions of plans or objectives of management for future
operations, insurance products or services;
- Forecasts of future insurable events, economic performance,
liquidity, need for funding and income; and
- Descriptions of assumptions or estimates underlying or relating
to any of the foregoing.
The risks and uncertainties include, without limitation, risks
and uncertainties related to estimates, assumptions and projections
generally; the nature of the Company’s business; the adequacy of
its reserves for losses and loss adjustment expense; claims
experience; weather conditions (including the severity and
frequency of storms, hurricanes, tornadoes and hail) and other
catastrophic losses; reinsurance costs and the ability of
reinsurers to indemnify the Company; raising additional capital and
our compliance with minimum capital and surplus requirements;
potential assessments that support property and casualty insurance
pools and associations; the effectiveness of internal financial
controls; the effectiveness of our underwriting, pricing and
related loss limitation methods; changes in loss trends, including
as a result of insureds’ assignment of benefits; court decisions
and trends in litigation; our potential failure to pay claims
accurately; ability to obtain regulatory approval applications for
requested rate increases, or to underwrite in additional
jurisdictions, and the timing thereof; the impact that the results
of our subsidiaries’ operations may have on our results of
operations; inflation and other changes in economic conditions
(including changes in interest rates and financial markets);
pricing competition and other initiatives by competitors;
legislative and regulatory developments; the outcome of litigation
pending against the Company, and any settlement thereof; dependence
on investment income and the composition of the Company’s
investment portfolio; insurance agents; ratings by industry
services; the reliability and security of our information
technology systems; reliance on key personnel; acts of war and
terrorist activities; and other matters described from time to time
by the Company in releases and publications, and in periodic
reports and other documents filed with the United States Securities
and Exchange Commission.
In addition, investors should be aware that generally accepted
accounting principles prescribe when a company may reserve for
particular risks, including claims and litigation exposures.
Accordingly, results for a given reporting period could be
significantly affected if and when a reserve is established for a
contingency. Reported results may therefore appear to be volatile
in certain accounting periods.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. We do not undertake any obligation to update
publicly or revise any forward-looking statements to reflect
circumstances or events that occur after the date the
forward-looking statements are made.
Contacts
Michael H. Braun, CEO (954) 308-1322,Ronald
Jordan, CFO (954) 308-1363,Bernard Kilkelly, Investor Relations
(954) 308-1409,or investorrelations@fednat.com
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Financial Highlights(Dollars in thousands, except per share
data)(Unaudited)
| |
|
As of or For the |
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
| Net Income (Loss)
Attributable to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(21,479 |
) |
|
|
$ |
7,110 |
|
|
(402.1 |
) |
% |
|
$ |
(19,346 |
) |
|
|
$ |
3,245 |
|
|
(696.2 |
) |
% |
| Adjusted operating income
(loss) |
|
(28,122 |
) |
|
|
5,666 |
|
|
(596.3 |
) |
% |
|
(23,802 |
) |
|
|
3,272 |
|
|
(827.4 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Per Common
Share |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) -
diluted |
|
$ |
(1.57 |
) |
|
|
$ |
0.55 |
|
|
(383.8 |
) |
% |
|
$ |
(1.38 |
) |
|
|
$ |
0.25 |
|
|
(649.1 |
) |
% |
| Adjusted operating income
(loss) - diluted |
|
(2.05 |
) |
|
|
0.44 |
|
|
(566.3 |
) |
% |
|
(1.70 |
) |
|
|
0.25 |
|
|
(770.0 |
) |
% |
| Dividends declared |
|
0.09 |
|
|
|
0.08 |
|
|
12.5 |
|
% |
|
0.18 |
|
|
|
0.16 |
|
|
12.5 |
|
% |
| Book value |
|
16.18 |
|
|
|
17.96 |
|
|
(9.9 |
) |
% |
|
16.18 |
|
|
|
17.96 |
|
|
(9.9 |
) |
% |
| Book value, excluding
AOCI |
|
15.13 |
|
|
|
17.24 |
|
|
(12.3 |
) |
% |
|
15.13 |
|
|
|
17.24 |
|
|
(12.3 |
) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Return to
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| Repurchases of common
stock |
|
$ |
3,250 |
|
|
|
$ |
— |
|
|
NCM |
|
$ |
10,000 |
|
|
|
$ |
— |
|
|
NCM |
| Dividends declared |
|
1,258 |
|
|
|
1,046 |
|
|
20.3 |
|
% |
|
2,560 |
|
|
|
2,087 |
|
|
22.7 |
|
% |
| |
|
$ |
4,508 |
|
|
|
$ |
1,046 |
|
|
331.0 |
|
% |
|
$ |
12,560 |
|
|
|
$ |
2,087 |
|
|
501.8 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
$ |
134,019 |
|
|
|
$ |
105,301 |
|
|
27.3 |
|
% |
|
$ |
249,718 |
|
|
|
$ |
206,498 |
|
|
20.9 |
|
% |
| Adjusted operating
revenues |
|
123,636 |
|
|
|
103,346 |
|
|
19.6 |
|
% |
|
242,160 |
|
|
|
202,242 |
|
|
19.7 |
|
% |
| Gross premiums written |
|
205,378 |
|
|
|
169,170 |
|
|
21.4 |
|
% |
|
378,340 |
|
|
|
301,403 |
|
|
25.5 |
|
% |
| Gross premiums earned |
|
179,896 |
|
|
|
141,220 |
|
|
27.4 |
|
% |
|
355,470 |
|
|
|
279,587 |
|
|
27.1 |
|
% |
| Net premiums earned |
|
111,478 |
|
|
|
92,306 |
|
|
20.8 |
|
% |
|
217,388 |
|
|
|
181,090 |
|
|
20.0 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios to Net Premiums
Earned |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss ratio |
|
116.5 |
|
% |
|
70.8 |
% |
|
|
|
91.5 |
|
% |
|
73.0 |
% |
|
|
| Net expense ratio |
|
31.4 |
|
% |
|
30.7 |
% |
|
|
|
35.6 |
|
% |
|
34.7 |
% |
|
|
| Combined ratio |
|
147.9 |
|
% |
|
101.5 |
% |
|
|
|
127.1 |
|
% |
|
107.7 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| In-Force Homeowners
Policies |
|
|
|
|
|
|
|
|
|
|
|
|
| Florida |
|
230,000 |
|
|
|
240,000 |
|
|
(4.2 |
) |
% |
|
230,000 |
|
|
|
240,000 |
|
|
(4.2 |
) |
% |
| Non-Florida |
|
149,000 |
|
|
|
60,000 |
|
|
148.3 |
|
% |
|
149,000 |
|
|
|
60,000 |
|
|
148.3 |
|
% |
| |
|
379,000 |
|
|
|
300,000 |
|
|
26.3 |
|
% |
|
379,000 |
|
|
|
300,000 |
|
|
26.3 |
|
% |
FEDNAT HOLDING COMPANY AND
SUBSIDIARIESConsolidated Statement of Operations(In thousands,
except per share data)(Unaudited)
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Revenues: |
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
111,478 |
|
|
|
$ |
92,306 |
|
|
$ |
217,388 |
|
|
|
$ |
181,090 |
|
|
Net investment income |
|
3,341 |
|
|
|
4,259 |
|
|
7,233 |
|
|
|
7,969 |
|
|
Net realized and unrealized investment gains (losses) |
|
10,383 |
|
|
|
1,955 |
|
|
7,558 |
|
|
|
4,256 |
|
|
Direct written policy fees |
|
3,593 |
|
|
|
2,403 |
|
|
7,059 |
|
|
|
4,794 |
|
|
Other income |
|
5,224 |
|
|
|
4,378 |
|
|
10,480 |
|
|
|
8,389 |
|
|
Total revenues |
|
134,019 |
|
|
|
105,301 |
|
|
249,718 |
|
|
|
206,498 |
|
| |
|
|
|
|
|
|
|
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
129,916 |
|
|
|
65,340 |
|
|
198,846 |
|
|
|
132,179 |
|
|
Commissions and other underwriting expenses |
|
29,270 |
|
|
|
22,562 |
|
|
65,625 |
|
|
|
50,796 |
|
|
General and administrative expenses |
|
5,663 |
|
|
|
5,779 |
|
|
11,908 |
|
|
|
12,090 |
|
|
Interest expense |
|
1,915 |
|
|
|
1,915 |
|
|
3,830 |
|
|
|
6,966 |
|
|
Total costs and expenses |
|
166,764 |
|
|
|
95,596 |
|
|
280,209 |
|
|
|
202,031 |
|
| |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(32,745 |
) |
|
|
9,705 |
|
|
(30,491 |
) |
|
|
4,467 |
|
| Income tax expense
(benefit) |
|
(11,266 |
) |
|
|
2,595 |
|
|
(11,145 |
) |
|
|
1,222 |
|
|
Net income (loss) |
|
$ |
(21,479 |
) |
|
|
$ |
7,110 |
|
|
$ |
(19,346 |
) |
|
|
$ |
3,245 |
|
| |
|
|
|
|
|
|
|
|
| Net Income (Loss) Per
Common Share |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
(1.57 |
) |
|
|
$ |
0.55 |
|
|
$ |
(1.38 |
) |
|
|
$ |
0.25 |
|
| Diluted |
|
(1.57 |
) |
|
|
0.55 |
|
|
(1.38 |
) |
|
|
0.25 |
|
| |
|
|
|
|
|
|
|
|
| Weighted Average
Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
|
| Basic |
|
13,714 |
|
|
|
12,844 |
|
|
13,981 |
|
|
|
12,820 |
|
| Diluted |
|
13,714 |
|
|
|
12,883 |
|
|
13,981 |
|
|
|
12,876 |
|
| |
|
|
|
|
|
|
|
|
| Dividends Declared Per
Common Share |
|
$ |
0.09 |
|
|
|
$ |
0.08 |
|
|
$ |
0.18 |
|
|
|
$ |
0.16 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Operating Metrics(Unaudited)
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
(In thousands) |
| Gross premiums written: |
|
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
122,151 |
|
|
$ |
128,016 |
|
|
$ |
233,698 |
|
|
$ |
231,979 |
|
|
|
Homeowners non-Florida |
|
77,508 |
|
|
36,212 |
|
|
135,450 |
|
|
61,532 |
|
|
|
Federal flood |
|
5,647 |
|
|
4,991 |
|
|
9,307 |
|
|
7,995 |
|
|
|
Non-core |
|
72 |
|
|
(49 |
) |
|
(115 |
) |
|
(103 |
) |
|
|
Total gross premiums written |
|
$ |
205,378 |
|
|
$ |
169,170 |
|
|
$ |
378,340 |
|
|
$ |
301,403 |
|
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
(In thousands) |
| Gross premiums earned: |
|
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
115,791 |
|
|
$ |
112,747 |
|
|
$ |
231,891 |
|
|
|
$ |
225,419 |
|
|
Homeowners non-Florida |
|
59,787 |
|
|
24,327 |
|
|
115,312 |
|
|
|
45,497 |
|
|
Federal flood |
|
4,246 |
|
|
3,642 |
|
|
8,382 |
|
|
|
7,109 |
|
|
Non-core |
|
72 |
|
|
504 |
|
|
(115 |
) |
|
|
1,562 |
|
|
Total gross premiums earned |
|
$ |
179,896 |
|
|
$ |
141,220 |
|
|
$ |
355,470 |
|
|
|
$ |
279,587 |
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
(In thousands) |
| Net premiums earned: |
|
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
68,247 |
|
|
$ |
71,394 |
|
|
$ |
136,301 |
|
|
|
$ |
141,882 |
|
|
Homeowners non-Florida |
|
43,159 |
|
|
20,480 |
|
|
81,202 |
|
|
|
37,803 |
|
|
Non-core |
|
72 |
|
|
432 |
|
|
(115 |
) |
|
|
1,405 |
|
|
Total net premiums earned |
|
$ |
111,478 |
|
|
$ |
92,306 |
|
|
$ |
217,388 |
|
|
|
$ |
181,090 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Operating Metrics (continued)(Unaudited)
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
(In thousands) |
| Commissions and other
underwriting expenses: |
|
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
13,618 |
|
|
$ |
13,401 |
|
|
$ |
27,445 |
|
|
$ |
26,623 |
|
|
All others |
|
12,834 |
|
|
5,920 |
|
|
24,452 |
|
|
11,187 |
|
|
Ceding commissions |
|
(3,161 |
) |
|
(2,906 |
) |
|
(6,060 |
) |
|
(5,690 |
) |
|
Total commissions |
|
23,291 |
|
|
16,415 |
|
|
45,837 |
|
|
32,120 |
|
| |
|
|
|
|
|
|
|
|
|
Fees |
|
1,222 |
|
|
759 |
|
|
2,336 |
|
|
1,438 |
|
|
Salaries and wages |
|
3,119 |
|
|
3,072 |
|
|
6,717 |
|
|
6,394 |
|
|
Other underwriting expenses |
|
1,638 |
|
|
2,316 |
|
|
10,735 |
|
|
10,844 |
|
|
Total commissions and other underwriting expenses |
|
$ |
29,270 |
|
|
$ |
22,562 |
|
|
$ |
65,625 |
|
|
$ |
50,796 |
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
Net loss ratio |
|
116.5 |
% |
|
70.8 |
% |
|
91.5 |
% |
|
73.0 |
% |
| Net expense ratio |
|
31.4 |
% |
|
30.7 |
% |
|
35.6 |
% |
|
34.7 |
% |
| Combined ratio |
|
147.9 |
% |
|
101.5 |
% |
|
127.1 |
% |
|
107.7 |
% |
| Gross loss ratio |
|
97.9 |
% |
|
60.8 |
% |
|
105.4 |
% |
|
135.3 |
% |
| Gross expense ratio |
|
21.2 |
% |
|
22.1 |
% |
|
23.5 |
% |
|
24.5 |
% |
FEDNAT HOLDING COMPANY AND
SUBSIDIARIESConsolidated Balance Sheet(Unaudited)
| |
|
June 30, |
|
December 31, |
| |
|
2020 |
|
2019 |
| ASSETS |
|
(In thousands) |
| Investments: |
|
|
|
|
|
Debt securities, available-for-sale, at fair value |
|
$ |
555,961 |
|
|
$ |
526,265 |
|
|
Debt securities, held-to-maturity, at amortized cost |
|
— |
|
|
4,337 |
|
|
Equity securities, at fair value |
|
18,040 |
|
|
20,039 |
|
|
Total investments |
|
574,001 |
|
|
550,641 |
|
| Cash and cash equivalents |
|
163,910 |
|
|
133,361 |
|
| Prepaid reinsurance
premiums |
|
81,564 |
|
|
145,659 |
|
| Premiums receivable, net of
allowance |
|
49,632 |
|
|
41,422 |
|
| Reinsurance recoverable,
net |
|
228,709 |
|
|
209,615 |
|
| Deferred acquisition costs and
value of business acquired, net |
|
63,022 |
|
|
56,136 |
|
| Current and deferred income
taxes, net |
|
11,408 |
|
|
2,552 |
|
| Goodwill |
|
10,997 |
|
|
10,997 |
|
| Other assets |
|
31,543 |
|
|
28,633 |
|
|
Total assets |
|
$ |
1,214,786 |
|
|
$ |
1,179,016 |
|
|
|
|
|
|
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Liabilities |
|
|
|
|
| Loss and loss adjustment
expense reserves |
|
$ |
387,723 |
|
|
$ |
324,362 |
|
| Unearned premiums |
|
383,739 |
|
|
360,870 |
|
| Reinsurance payable |
|
67,876 |
|
|
102,467 |
|
| Long-term debt, net of
deferred financing costs |
|
98,603 |
|
|
98,522 |
|
| Deferred revenue |
|
6,984 |
|
|
6,856 |
|
| Other liabilities |
|
48,181 |
|
|
37,246 |
|
|
Total liabilities |
|
993,106 |
|
|
930,323 |
|
| Shareholders'
Equity |
|
|
|
|
| Preferred stock, $0.01 par
value: 1,000,000 shares authorized |
|
— |
|
|
— |
|
| Common stock, $0.01 par value:
25,000,000 shares authorized; 13,703,175 and 14,414,821 shares
issued and outstanding, respectively |
|
137 |
|
|
144 |
|
| Additional paid-in
capital |
|
168,485 |
|
|
167,677 |
|
| Accumulated other
comprehensive income (loss) |
|
14,390 |
|
|
10,281 |
|
| Retained earnings |
|
38,668 |
|
|
70,591 |
|
|
Total shareholders’ equity |
|
221,680 |
|
|
248,693 |
|
|
Total liabilities and shareholders' equity |
|
$ |
1,214,786 |
|
|
$ |
1,179,016 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESGAAP to
Non-GAAP Reconciliations(Dollars in thousands)(Unaudited)
| |
|
As of or For the |
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Revenue |
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
134,019 |
|
|
|
$ |
105,301 |
|
|
|
$ |
249,718 |
|
|
|
$ |
206,498 |
|
|
| Less: |
|
|
|
|
|
|
|
|
|
Net realized and unrealized investment gains (losses) |
|
10,383 |
|
|
|
1,955 |
|
|
|
7,558 |
|
|
|
4,256 |
|
|
|
Adjusted operating revenues |
|
$ |
123,636 |
|
|
|
$ |
103,346 |
|
|
|
$ |
242,160 |
|
|
|
$ |
202,242 |
|
|
| |
|
|
|
|
|
|
|
|
| Net Income
(Loss) |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(21,479 |
) |
|
|
$ |
7,110 |
|
|
|
$ |
(19,346 |
) |
|
|
$ |
3,245 |
|
|
| Less: |
|
|
|
|
|
|
|
|
|
Net realized and unrealized investment gains (losses) |
|
6,659 |
|
|
|
1,460 |
|
|
|
4,527 |
|
|
|
3,178 |
|
|
|
Acquisition and other costs |
|
1 |
|
|
|
(16 |
) |
|
|
(26 |
) |
|
|
(536 |
) |
|
|
Amortization of identifiable intangibles |
|
(17 |
) |
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
|
|
Gain (loss) on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,669 |
) |
|
|
Adjusted operating income (loss) |
|
$ |
(28,122 |
) |
|
|
$ |
5,666 |
|
|
|
$ |
(23,802 |
) |
|
|
$ |
3,272 |
|
|
| |
|
|
|
|
|
|
|
|
| Income tax rate assumed for
reconciling items above |
|
35.74 |
|
% |
|
25.35 |
|
% |
|
40.10 |
|
% |
|
25.35 |
|
% |
| |
|
|
|
|
|
|
|
|
| Per Common
Share |
|
|
|
|
|
|
|
|
| Book value |
|
$ |
16.18 |
|
|
|
$ |
17.96 |
|
|
|
$ |
16.18 |
|
|
|
$ |
17.96 |
|
|
| Less: |
|
|
|
|
|
|
|
|
|
AOCI |
|
1.05 |
|
|
|
0.72 |
|
|
|
1.05 |
|
|
|
0.72 |
|
|
|
Book value, excluding AOCI |
|
$ |
15.13 |
|
|
|
$ |
17.24 |
|
|
|
$ |
15.13 |
|
|
|
$ |
17.24 |
|
|
FedNat (NASDAQ:FNHC)
Historical Stock Chart
From Mar 2024 to Apr 2024
FedNat (NASDAQ:FNHC)
Historical Stock Chart
From Apr 2023 to Apr 2024
